Foreign Property Investment for Visas Displacing Locals in Athens

Imagine you are in a country that is looking to increase investment in a floundering real estate market. Even though real estate prices are now at 40 percent from their peak, Greece has not recovered from the 2009 debt crisis, and is offering visas to non-European Union citizens when they invest 250,000 Euros in real estate. This is cheaper than Portugal’s offer of a visa which requires twice the investment of at least 500,000 Euros. Those prices translate to 374,000 Canadian dollars in real estate in Greece to obtain a visa, and 748,000 Canadian dollars to get a visa in Portugal.

There are three direct flights a week from China to Greece, and for those Chinese investors in Athens real estate their buying power enables them to purchase two properties for the price of one in Portugal. Despite curbs on the exporting of currency from China, Chinese investment has continued in Greece, along with Russian and Turkish real estate investment.

The Daily Telegraph has reported that foreign owners purchase the Greek properties, and then evict tenants preferring to rent the new purchases as vacation properties through Air BnB. Since 2016 the number of Air BnB properties has exponentially exploded from 9,000 to 129,000 available units.

As the Telegraph observes the Greek “golden visas” have strengthened the real estate market and the government is bullish on the program. Buying a visa in exchange for a real estate investment in Greece allows non-European Union citizens to live and work in Greece, travel anywhere in Europe, and also apply for European Union citizenship

The downside is the displacement of local people from previously rented housing stock and an accompanying rent increase of up to 300 Euros (450 Canadian dollars) in those areas where Air BnB rentals are popular. Called the “Air BnB epidemic” this phenomena has also occurred in cities like Barcelona where offshore investors have also purchased real estate. One of the differences in Greece is that the government has “agreed to a full release of short leases, disregarding its previous commitments”. The number of Greek visas tripled last year, as foreign investors could purchase units with relatively few local tenancy strings attached.

And here is the surprise~the BBC reports that “Enterprise Greece – a business promotion body states that 9,756 residence permits for investors and their families were issued in 2018 up to the end of November”. Half of the visas in 2017 went to Chinese nationals. That interest, and plans by the Greek government to expand the program has doubled inquiries about Greek real estate on Juwai.com the Chinese global real estate site in the first quarter of 2018. Those inquiries tripled in the second quarter, suggesting that there will be more pressure on Athens available housing units in the years to come.